Update: PHMSA fines ExxonMobil $2.6 M for violations

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Federal pipeline regulators are fining ExxonMobil more than $2.6 million for violations in connection to the Pegasus pipeline that ruptured in a Mayflower neighborhood March 29 of this year.

The U.S. Department of Transportation Pipeline and Hazardous Materials Safety Administration released a violation notification and compliance order to the company Wednesday, along with the $2.6 million civil penalty, at the end of the agency’s investigation into factors surrounding the pipeline failure.

In a letter to ExxonMobil, PHMSA says the company violated pipeline safety regulations, which include leaving out certain manufacturing information when determining risk factors.

Specifically, the letter states, the operator failed to include the susceptibility of its Youngstown-Ohio-manufactured pre-1970 low frequency electric resistance welded pipe seam to failures as a risk factor when the company implemented its own integrity management program.

Pipeline manufactured before 1970 using ERW has been documented as early as the 1980s to be prone to failure along its seams.

ExxonMobil spokesman Aaron Stryk has said the segment of the Pegasus pipeline that runs through the area was manufactured using ERW.

The line that runs through Mayflower extends to the Lake Maumelle Watershed.

According to PHMSA, ExxonMobil documented multiple hydrostatic test failures along the pipeline’s ERW seam in a test in 1991 and in subsequent hydrostatic testing in 2005 and 2006.

The letter states the hydrostatic testing failure in the history of the pipeline “provided more than adequate information for the pipe to be considered susceptible to seam failure.”

Further, ExxonMobil did not present an acceptable engineering analysis to PHMSA to demonstrate that the Pegasus pipeline was not susceptible to seam failure, the letter states.

ExxonMobil reversed the flow of the pipeline, which was carrying a mixture of Wabasca heavy crude oil and chemical diluents, in 2006, records show.

A federal corrective action order issued three days after the several thousand gallon spill stated the change in direction, along with an increase in flow pressure, could impact the hydraulic and stress demands on a pipeline.

ExxonMobil also failed to prioritize post-hydrostatic testing reassessments in high risk areas, according to PHMSA.

High risk areas are defined by PHMSA’s integrity management regulations as those with high populations.

ExxonMobil’s Pegasus ruptured in the Northwoods neighborhood off of Main Street in Mayflower.

The crude oil flowed through the neighborhood and into a series of drainage ditches, under Interstate 40 and into the Lake Conway Watershed.

About 22 homes were evacuated in the neighborhood, and since the oil spill Exxon has demolished two of the homes the company purchased from residents.

Exxon has offered a purchase program to residents in the Northwoods subdivision.

Six months after the spill, many residents were still in negotiations with ExxonMobil.

ExxonMobil issued a statement in response to PHMSA’s findings, saying the company is “disappointed that the Pipeline and Hazardous Materials Safety Administration (PHMSA) has decided to issue a Notice of Probable Violations (NOPV) on the Pegasus incident.”

Stryk said Wednesday ExxonMobil remains under the corrective action order PHMSA issued in the days after the spill and is cooperating in all matters related to the agency’s investigation.

PHMSA approved a 90-day extension last month for submitting a work plan on Pegasus to allow for the completion of previously approved supplemental testing and analysis on the pipeline, Stryk said via e-mail.

“We are committed to understanding the factors that led to the release in Mayflower first and then establishing the integrity of the entire pipeline to ensure an incident like this does not happen again,” he said in response to a question about the rest of the ERW segments that make up the Pegasus pipeline. “We will review the NOPV and will continue to work with PHMSA on any follow-up actions.”

The Pegasus pipeline is still out of commission, Stryk reminded.

He said ExxonMobil will not restart it until the company is satisfied the pipeline is safe and with PHMSA’s approval.

Stryk said ExxonMobil is reviewing the notice that was received Wednesday before determining the next step, he said when asked if ExxonMobil would follow the compliance orders PHMSA issued.

Along with additional violations, including neglecting to take prompt action on “anomalous conditions” and treating immediate conditions with “validation digs,” the letter outlines more orders to comply with federal regulations.

Revisions in several procedures and more internal investigations are part of the compliance order.

The operator ExxonMobil must update its safety regulations to include consideration of the failure-susceptible pipeline, according to the PHMSA order.

The condition is addressed in a violation that states ExxonMobil failed to update its pipeline risk assessment, and with no identified threats in the segment that includes Mayflower, made integrity decisions that relied upon incorrect analysis.

Stryk said it appears PHMSA’s analysis is flawed, and the agency made some fundamental errors.

ExxonMobil has 30 days from the final order to submit a spreadsheet to PHMSA that identifies all ERW pipeline in territory which PHMSA has jurisdiction.

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The Pipeline and Hazardous Materials Safety Administration has issued a notice with many violations, a civil penalty and a compliance order to ExxonMobil, the group announced Wednesday.

The proposed civil penalty is more than $2.6 million.

The violation notice and penalty are the results of PHMSA's investigation into the Pegasus pipeline operated by ExxonMobil.

The company's pipeline ruptured in Mayflower and spilled several thousands of barrels of Wabasca heavy crude into a residential neighborhood on March 29 of this year.

In a letter to ExxonMobil, PHMSA says the company violated pipeline safety regulations, which include leaving out certain manufacturing information when determining risk factors.

Specifically, the letter states, the operator failed to include the susceptibility of its Youngstown, Ohio-manufactured pre-1970 low frequency electric-resistance welded pipe seam to failures as a risk factor when the company implemented its own integrity management program.

According to PHMSA, ExxonMobil documented multiple hydrostatic test failures along the ERW seam in a test in 1991 and in subsequent hydrostatic testing in 2005 and 2006.

The company reversed the flow of crude in the pipeline in 2006, records show.

The change in direction, along with an increase in flow pressure, can impact the hydraulic and stress demands on a pipeline, according to PHMSA's corrective action order issued to ExxonMobil three days after the spill in Mayflower.

Further, the PHMSA letter to ExxonMobil states the company did not present an acceptable engineering analysis to PHMSA to demonstrate that the Pegasus pipeline was not susceptible to seam failure.

ExxonMobil also failed to prioritize post-hydrostatic testing reassessments in the segment of the pipe that posed the highest risk before assessing segments in lower risk areas.

Another failure cited is neglecting to take prompt action in addressing anomalous conditions and treating an immediate condition with "validation digs" or "confirmation digs."

The operator ExxonMobil failed to update its pipeline risk assessment, and with no identified threats in the segment that includes Mayflower, made integrity decisions that relied upon incorrect analysis, PHMSA found.

The accompanying compliance order states that ExxonMobil must update its safety regulations to include consideration of the failure-susceptible pipeline that makes up part of the Pegasus.

The order calls for revisions in several procedures and more internal investigations.

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To a multinational multibillion dollar company like ExxonMobil, a $2.6 million fine amounts to nothing more than chump change. Big shots in the board rooms know all about the risks and just figure that into their cost calculations. Following the law and building, inspecting and repairing the pipeline according to regulations costs much more than dealing with spills and paying the odd fine. Until it pays to do the right thing these big oil giants will continue to take the easy way. They owe it to their stockholders to operate as cheaply as possible. They only owe the people of Mayflower what some court says they owe. And I expect even this fine will be appealed.

Let me add: "Across the nation, 200 VP's and their subordinates sat on their hands for 15 seconds in objection to this outrageous fine. Meanwhile Exxon-Mobil earned $75 Million dollars (net) during the actual 4 second protest."

Mike, heck yes some lawyers got some feed (excuse my local accent). What do you think this is, communism?

I think even CG out did me though, "Was made. .(Ca-Ching). by Exxon in the . .